Earnings Of The Uber Drivers
There is nothing like the freedom of being your own boss. Having the liberty to work at your will and still earning $25/hour is a great proposition and there would be a few people that would let this chance go by.
However, when you get deep down to the details, you will find that there are several takers for the scheme, there are others that are not too happy.
This is all about Uber, the ubiquitous domain of cab drivers that can work at their will to make ends meet. For some, the proposition holds good enough and they seem to make the promised sum but for others that quit their full time job to work their own hours, it was a risk that didn’t fare well.
A justification is therefore necessary to actually see whether the claims made by Uber about some of their drivers earning in six figures really hold true or is it just a hiring gimmick by the company. Here are the details of the entire setup.
Ride sharing in the recent years has gotten a boost as several companies have entered the domain. Commuters too, find the setting beneficial as they only need to pay their share of ride and not for the entire cab. However, even despite the rising demand for ride sharing, drivers that are joining these companies are said to be quitting after a year. The main reason given for this exodus is the monetary expectations of the drivers which remain far below than what they had anticipated and expected. So, how much do the Uber drivers actually get?
When looking for answers the above question, there are two important questions that need to be answered:
1.What is the actual cost of riding the Uber?
2.What are the expenses of the Uber drivers?
Answering the first question first:
The calculation for knowing how much the riders pay when using Uber is as follows:
Riders are charged for the time and distance they travel in the Uber. In addition, they have pay for the base fare and other rider fee that Uber incurs onboard. The ride can get costlier if the supply of drivers as compared to the demand is less because Uber then applies Surge Pricing. The cost of riding the Uber therefore, depends on the type of Uber requested and the city you are riding in.
This can be explained with an example:
A rider in Chicago wants to travel from The Sears Tower to the Navy Pier, a distance of 2.3 miles which takes 15 minutes, approximately. The base fare charged in Chicago is $1.70, the cost per mile is $0.90 and the cost per minute is $0.20 with the booking fee being $1.20. So, the total passenger fare would sum up to:
1.70 + (0.20x15) + (0.90x2.3) +1.20 = $8 (approx.)
The Fare Estimator from Uber puts this between $12 – 14
Taking the upper limit, it is estimated that the passenger fare is $14. However, the Uber driver does not take the entire sum of $14. 20% cut is taken by Uber, leaving the driver to earn less.
$14 - $1.20 booking fee – ($12.8x0.80) = $10.24
Going by this calculation the driver should earn around $10.24 for the 15 minute ride. However, even this is not the final take away figure by the driver as there are certain expenses that he incurs on the way; which then brings us to the second question.
Expenses of the Uber Drivers
There are certain expenses that Uber drivers have to bear, which even if ignored initially can come back later to eat into the real income. These expenses are as follows:
Insurance: The insurance figure might vary from State to State and from driver to driver as driver’s age, location and vehicle type are also taken into consideration.
Car/lease payments: Drivers can use their own cars when driving for Uber or can lease them from Uber as well. In the case of the latter, they will have to make the lease payments as well.
Tolls, permits and license fee: The expenses on tolls, permits and license fee must be borne by the drivers. If the passengers are using the car when a toll is paid, they are charged a surcharge in the fare.
Gas: The drivers being individual contractors need to bear the cost of the gas by themselves and they are not reimbursed in any way.
Vehicle maintenance: The drivers have to bear all the maintenance charges of their vehicles. They are however compensated in case a passenger damages their vehicle.
As a rule in the rideshare industry, 20% of the fare is deducted for ride related expenses. Taking the example that leaves us with $10.24x0.8=$8.19.
Therefore, if a driver gets two similar rides in an hour, he would be making approximately $15-20 per hour.
However, this was just a hypothetical situation. In reality, there could be so many other things and factors that need to be taken into account before the actual figures can be drawn.